China 'places unofficial ban' on key metals exports to Japan

China has been reported to have placed an unofficial ban on the export of rare earth metals to Japan as a damaging dispute between the countries deepens. The metals are essential for a host of hi-tech items from iPods to wind turbines and hybrid cars.

China produces an estimated 97% of rare earths consumed world-wide and the secretive Baiyun Obo mine in Inner Mongolia accounts for over three quarters of thisPhoto: REX FEATURES

By Peter Foster in Beijing and Julian Ryall in Tokyo

12:58PM BST 23 Sep 2010

The New York Times, citing industry sources, said that China had placed an "administrative halt" on the export of the metals, just as the two countries are locked in a dispute over the detention of a Chinese trawler captain. The captain was arrested by Japanese coastguard officials in disputed waters off Taiwan just over two weeks ago.

But there was confusion on Thursday as to whether the ban alleged by industry insiders was directly related to the fishing boat incident, or the result of export restrictions that were imposed earlier this year.

China's Ministry of Commerce denied the report unequivocally. "China has not issued any measures intended to restrict rare earth exports to Japan. There is no foundation for that," said a ministry spokesman, "I don't know how the New York Times came up with this, but it's not true. There are no such measures."

However Dudley Kingsnorth, executive director of the rare earth consulting company Industrial Minerals Company of Australia, who was quoted in the New York Times, said associates in the industry had said an effective ban was in force. "I was told it was an 'unofficial ban,'" Mr Kingsnorth also told the Associated Press, "[China] requested major companies to withhold major exports to Japan."

In Tokyo, a spokesman for the Ministry of Foreign Affairs said the government had received no official confirmation from Beijing that a ban had been imposed on exports of rare earth materials to Japan.

Related Articles

"We have seen these reports but have not been able to confirm whether they are accurate," said Hidenobu Sobashima, a ministry official.

Separately yesterday, four Japanese were being questioned for entering a military zone in north China without authorisation and illegally videotaping military targets, Chinese state media reported. Quoting an unnamed source, Japanese news agency Kyodo said the four people being questioned were in the construction industry.

China, which controls 97 per cent of the global production of rare earth metals, has imposed tough export restrictions this year, raising objections from Japan, the US and the European Union. Japanese officials urged China last month to ease the export controls which China says are necessary to preserve supplies and enforce strict environmental controls.

Prices of some metals are now up to four times cheaper to source inside China, which some analysts say is part of a strategy in Beijing to force companies to consider relocating production to facilities inside China.

"Chinese economic sanctions would hurt Japan badly," said Professor Jeff Kingston, director of Asian studies at Temple University in Tokyo. "Controlling the global supply enables China to benefit from the surging market in products that use rare earth metals, especially green technology products ... at the moment [China] has the world – and especially Japan – over a barrel."

Additional reporting by Danielle Demetriou in Tokyo and Bonnie Malkin in Sydney